Getting Paid for Storm Work – A New Formula

While this article could be construed as promotion of a new product/service, TCI Magazine editorial staff felt that the issues discussed in it and the solutions the product may provide could not be separated, and that the topic is important and topical enough to publish the discussion.
– Editor

For years, I’ve wrestled with how to solve the multiple problems I’ve experienced contracting and getting paid for storm work. I think I’ve found the solution.

Full disclosure – the solution is a new software service, though it is being offered for free while in beta testing.

Quick background

I’m an ISA Certified Arborist, a licensed insurance adjuster and a software developer. When I bought my first knuckle-boom crane, I had a huge problem. Living in a large metro area, I was both the only CDL driver as well as the salesperson. Because of this, it took too much time to drive out to give an estimate, then come back to get the crane just to make another trip back out to do the work. Needing a solution, I saw that crane companies didn’t do estimates, but instead invoiced for hourly rates. It worked for their cranes, so I adopted hourly rates for every asset I had, i.e., workers, loaders, trailers, aerial lifts, etc., and put all of my pre-printed hourly rates onto an online contract that the customers could sign.

By putting all hourly rates on a pre-printed contract, it allowed me to eliminate face-to-face estimates. That’s right. I don’t do estimates anymore for storm work. In fact, since 2020, we’ve done more than 450 storm jobs, and out of those I think I made site visits to only two prior to our arriving ready to work. Crazy, huh?

When homeowners call me, I have them send me a few photos and then I check out the job site from Google Street View and Google 3D View. Then I understand what the scope of the work is and what tools are needed to deploy. After I explain the process, the homeowner signs the contract online with my hourly rates, and we deploy within minutes.

Pre-printed hourly rates for storm work on an online, signable contract is by far the best solution for all parties, because it brings homeowners safety in the fastest way possible and tree services don’t waste time giving estimates.

This is the direction the industry needs to go, because it solves so many problems.

Data darkness

For the last three-and-a-half years, I’ve been awash in a sea of darkness. I realize that sounds a bit dramatic, but it’s the best way I can put it. Everywhere I turn, no one has the correct data. There’s been nothing solid to grab hold of for a reference point of true, correct and reasonable pricing.

I believe that we, as an industry, can shine the light of information into that dark corner of the room. Physics tells us that when light comes in, darkness has to leave. When this happens, all parties involved will benefit. Let’s look closer at some of the problems.

Problem 1: Safety

The darkness of homeowners not having access to a database of reasonable costs has hurt and, no doubt, even killed homeowners. No homeowner should ever have to live under or be near a downed, destabilized and dangerous tree as they wait for multiple estimates. But they do because of the lack of market clarity.

We arborists know how dangerous these trees are, but homeowners don’t. Just as we, from time to time, have accidents or injuries in our industry, in all probability, homeowners have been injured or lost their lives waiting for estimates. This should never happen, but it does because we as an industry have never realized there was an alternative to the old estimate model.

Problem 2: Price fixing

Another issue we face as an industry is price fixing. The Sherman Antitrust Act of 1890 was designed to “preserve free and unfettered competition as the rule of trade.” This means that something as seemingly innocent as trying to create standard market pricing can be seen as criminal intent to manipulate a free and open market. The Sherman Antitrust Act outlaws “every contract, combination, or conspiracy in restraint of trade,” as well as the “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”

In other words, tree services banding together to set rates could be seen as similar to criminals creating a cartel, and the feds say this is no bueno. So how do we know what “reasonable” standard pricing should be, without fixing the price?

Problem 3: Force fitting “all-in” bids into hourly rates

Force fitting “all-in” bids into hourly rates creates false data. Bidding “all-in” has continued the problem by not breaking out each asset for an hourly rate. When we bid jobs on an all-in basis, the insurance adjusters struggle, constantly asking for more details because their software requires them to input hours deployed for preset assets. The actual assets we use often don’t match the assets they have in their software. Under pressure from management to resolve these discrepancies, adjusters often make up false numbers for assets or hours deployed, which were not the actual, true hours or true assets. Entering false data into their system as if it was true data corrodes the data set and affects future claims pricing, skewing the numbers and rendering the platform unusable.

Problem 4: Negotiating with the insurance carrier

Every related policy I have ever seen reads that insurance companies will pay the reasonable cost incurred to remove the tree from the covered structure. That said, if the price was in line with what the market really was at the time of signing the work contract, tree services and adjusters should never, ever, ever have to negotiate price after the fact. That just does not make sense. This is because, by definition, the true market price is discovered when a buyer and seller agree on a price through an arm’s-length transaction in an open and free market. True and accurate market price is not discovered after the price is agreed to and work has been performed. Adding to this, when adjusters rely on potentially false number output, based on make-believe data input from past claims, the answer to where such huge price discrepancies come from becomes evident.

Problem 5: Accusations

With the lack of true data, everyone is in darkness, so everyone gets accused. Homeowners accuse tree services of price gouging. Tree services accuse each other of gouging and insurance companies of underpaying. The insurance companies and state governments accuse tree services of overcharging or price gouging.

The solution

OK, so here is my solution – Clarity Market, LLC, and the website ClarityMarket.com, an online market of emergency contractors, sortable via their hourly rates for assets and arrival times. Because it is an experiment and unproven, at least initially and for the foreseeable future, joining and using ClarityMarket.com will be free while in beta mode. While still a work in progress, it will debut at TCI EXPO ’22 in Charlotte, North Carolina, in early November.

The “membership” will provide access to online signable contracts and an invoice-creation function, which also will automatically generate comparable “Market Snapshots,” a trademarked term, to support actual market conditions after the work has been performed.

Details of how it works

On the Clarity Market website, the tree service sets a radius from where their asset is located and how far they will go to one job. A homeowner will search for all companies competing for their business that service their address. They will be able to see the hourly rates and can agree to purchase or not. Thus,
ClarityMarket.com will solve the Sherman Antitrust Act problem by creating a truly open and efficient marketplace, allowing the consumer to shop companies competing by price, availability and reviews to make an informed decision in a way never before possible.

When a homeowner signs up with a particular service, the company will run the clock for the particular assets deployed to that location for that project. At the end of that project, the company will simply calculate every asset allocated and the corresponding number of hours for each asset, which will result in the total invoice.

The true-market-price/accusation problems are solved, because the system knows the hourly asset rates as well as the drive time to and from locations for every other tree service that had that address within its service radius. So, along with the invoice, the system will automatically calculate what the other competing companies would have cost had they been deployed to that location. In short, these will be automatically generated comparables that the tree service will submit to the insurance company along with its invoice. The safety issue of the homeowner waiting for estimates is solved, because the comparables are literally the same net result as if the homeowner got estimates ahead of time.

The homeowner seeing and agreeing to the price ahead of time, combined with the tree service presenting automatically calculated comps along with the invoice, will solidify to the insurance adjusters exactly what the current market conditions were at the time of purchase. This is designed to solve the lack of true-market-pricing data, eliminating the need for negotiations between adjusters and tree services.

ClarityMarket.com is designed to:

• Eliminate you wasting time giving estimates.
• Get you new customers through the online directory.
• Equip you to understand insurance standards and invoicing with a free online insurance course.
• Pull you out of the sea of darkness and obscurity and stop you from grasping for the true market price.

After perfecting the hourly model over the last four years and seeing how quickly we can deploy, I realized hourly billing is by far the way the industry should work. It’s both safer for the homeowner and the most accurate way of pricing for assets deployed.

They call, we look and measure, they sign, we deploy. The homeowners are safe, and we get paid. This workflow is pretty nice.

Mark Russell, an ISA Certified Arborist and a Tree Risk Assessment Qualified (TRAQ) arborist, owns and operates 770-Arborist Emergency Tree & Crane, an 11-year TCIA member company based in Atlanta, Georgia. He also is a licensed public insurance adjuster and founder of ClarityMarket.com, an online market for emergency mitigation services. You can read his blog at my.claritymarket.com.